Small businesses are increasingly turning to tablets and mobile software in order to accept payments and manage their businesses. These hardware and software products are together known as mobile point-of-sale (mPOS).
mPOS a disruptive trend that took off with the launch of Square’s mobile card reader and has expanded to offerings from scores of companies.
Payment processors are in a unique position to see the trend shaping the payments industry since they handle transaction processing for many of these merchants.
BI Intelligence recently had an opportunity to sit down with with Vantiv executives Daniela Mielke, chief strategy and product officer, and Matt Taylor, group president of integrated payments and emerging channels, to discuss the impact of mPOS. Vantiv is the second-largest merchant processor by payment volume behind First Data, according to The Nilson Report.
This Q&A has been edited for brevity and clarity.
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BI Intelligence: Matt, given your experience in integrated payments, could you tell us a bit about the impact mPOS is having on adoption? It seems like mPOS might be a driver of integrated payments among smaller merchants. [Integrated payments is a term for systems that connect payments technology across channels, business locations, and offer additional business management services.]
Matt Taylor: It’s creating an interesting evolution of technology and business models. Tablet as a form factor is a really exciting aspect of integrated payments. We have close to 40 different ISVs [independent software vendors] that sell tablets in different markets. They’re still on the lower end of the market, but they are training the rest of the market to be more innovative by plugging into different apps, communicating with customers’ phones, and creating a sense of the user experience that hasn’t really existed before.
It’s also speeding up upgrade cycles. It used to be that a restaurant held a system for 5-7 years. Now they hold a tablet for two or three years because something else comes out and they like the new software.
That said, I think there’s a lot of innovation that needs to happen around hardening the tablets in a retail environment, because right now they’re made for consumers. The market for mPOS is evolving, but it still doesn’t have nearly the penetration rates of traditional POS. But, it will catch up with time.
BII: One of the things that I saw when I walked around Brooklyn and talked to merchants about their mPOS devices is — like you were saying — they are not durable and this creates a problem for businesses like food trucks because food or drinks get spilled on them and they are destroyed. But what the merchants do like is the business management apps. Is there an opportunity for Vantiv and others there or is that more downstream?
Daniela Mielke: The next generation of tablets coming out is actually purpose-built. I think all of the big tablet manufacturers are working on it and several startups also.
In terms of services, the Holy Grail is to have these services integrated with all the different apps that provide back-office and front-office functionality.
The way we are thinking about it is that we are going to leverage our developer platforms. We’ll partner with select developers who are going to integrate onto our platform and develop these services.
MT: We want to be a services company. POS connectivity is the merchant’s domain and we do core processing and value-added services. We’ll create a layer of APIs that make it friendly for the developer who’s running applications on the tablet. Developers writing for that market are going to connect with us so that there is a seamless commerce experience.
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